The Corporate Governance Role of the Media: Evidence from Russia
I. J. Alexander Dyck
University of Toronto - Rotman School of Management
New Economic School (NES); Center for Economic and Financial Research (CEFIR)
University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); University of Chicago - Polsky Center for Entrepreneurship; European Corporate Governance Institute (ECGI)
NBER Working Paper No. w12525
We study the effect of media coverage on corporate governance by focusing on Russia in the period 1999-2002. This setting offers us three ideal conditions for such a study: plenty of corporate governance violations, no alternative mechanisms to address them, and the presence of an investment fund (the Hermitage) that actively lobbies the international press to shame companies perpetrating those violations. We find that Hermitageâ€TMs lobbying is effective in increasing the coverage of corporate governance violations in the Anglo-American press. We also find that coverage in the Anglo-American press increases the probability that a corporate governance violation is reversed. This effect is present even when we instrument coverage with an exogenous determinant, i.e. the Hermitageâ€TMs portfolio composition at the beginning of the period. The Hermitageâ€TMs strategy seems to work in part by impacting Russian companiesâ€TM reputation abroad and in part by forcing regulators into action.
Number of Pages in PDF File: 75working papers series
Date posted: September 25, 2006
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